Economic Growth in the Democratic Republic of Congo: Impact of Private and Public Investment
DOI:
https://doi.org/10.47604/ijfa.3785Keywords:
Public Investment, Private Investment, Foreign Direct Investment, Economic Growth, Government Net Borrowing, Ease of Doing BusinessAbstract
Purpose: This study investigates the impact of private and public investment on economic growth in the Democratic Republic of Congo (DRC), a resource-rich economy characterized by volatility, weak infrastructure, and governance challenges. By focusing on the dynamics of investment flows and the ease of doing business, the research seeks to clarify how capital allocation and business climate shape growth outcomes in such a fragile context.
Methodology: The study relies on secondary data from 1994 to 2023 and applies structural equation modeling (SEM) to assess both direct and indirect effects. The analysis incorporates gross fixed capital formation (GFCF), foreign direct investment (FDI), government net borrowing (GNB), and business environment measured through the Ease of Doing Business (EODB) index. This approach allows for a nuanced evaluation of moderated relationships between investment variables and GDP growth.
Findings: The results reveal that the private and public investment flows significantly influence economic growth, leading to the rejection the null hypothesis. Foreign direct investment and government net borrowing contribute positively to GDP growth, while gross fixed capital formation exerts a negative effect, reflecting inefficiencies in public investment allocation. The ease of doing business emerges as a critical determinant, with weak governance undermining the effectiveness of both private and public investment. The results align with endogenous growth theory, emphasizing that sustainable growth depends not only on investment levels but also on institutional reforms and fiscal discipline.
Unique Contribution to Theory, Practice and Policy: the study suggests efficient allocations of public funds to reduce waste, prudent debt management to safeguard fiscal stability, and diversification of foreign direct investment beyond extractive industries to enhance resilience. Strengthening of governance frameworks to transform investment flows into inclusive and sustainable growth.
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Copyright (c) 2026 Christian I. Kanyamukenge, Dorothy Muthoka Kagwani
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